Cheri Drives into Domestic Auto Service and Asks to Have

question 10

Multiple Choice

Cheri drives into Domestic Auto Service and asks to have a tire replaced on her car. After Domestic replaces the tire and Cheri pays for it, the contract between them is

• A) executed.
• B) executory.
• C) void.
• D) unenforceable.

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profitability from regular business operations.

Transfer Price

The price at which goods and services are sold between divisions within the same company or between a company and its subsidiary.

Variable Cost

Costs that fluctuate directly with changes in production or sales volume.

Cost Driver

Any activity or factor that can cause a change in the cost of a product or service, used in activity-based costing to allocate costs accurately.